McDonald's SA keeps eye on growth in tough market

MCDONALD's SA is on track to double revenue in the next four years and still plans to open about 25 restaurants a year despite tough trading conditions, MD Greg Solomon said on Monday.

Competition is intensifying in South Africa's fast-food market, particularly at the lower end, with existing companies planning to expand and foreign brands considering expansion into the country.

"It has been a tough environment since the Soccer World Cup but we should see some improvement by quarter one next year," Mr Solomon said.

Consumers had been "downtrading", he said, as they began to feel the pinch of rising costs, but McDonald's had also gained the support of new customers turning away from competitors with more expensive offerings.

The company now has 163 restaurants but hopes to speed up growth in the next year. "We do not trade in many areas. There is space to grow in parts of the North West and KwaZulu-Natal as well as the northwestern Cape," he said.

McDonald's SA was also eyeing expansion into Africa, Mr Solomon said.

"We have to learn how to eat off our own plate first," he said, and South Africa remained a priority. "We will not be the first to go into Africa, but we will be bold when we eventually do."

Businessman Cyril Ramaphosa's company Shanduka acquired the 20-year master franchise last year to run all McDonald's restaurants in South Africa. It has a combination of franchise and corporate-owned stores.

Yum, which owns KFC in South Africa, has said it will soon bring its Pizza Hut franchise to the country, while Burger King may also grace local shores in the near future, the US chain said last year.

"Threats are always there, but it also says someone else sees opportunity in this market," Mr Solomon said.

Yum is considered the world's largest fast-food restaurant company, with about 38000 restaurants in more than 110 countries. Its turnover in South Africa was about R8bn last year.

Local company Famous Brands said earlier this year that it was on the lookout for acquisitions and would consider new market segments, including "evening casual dining", within the next few months.

It plans to open about 250 new stores in the coming year, of which 48 will be outside South Africa. It reported group revenue of R2,16bn and operating profit growth of 15% to R413m for the most recent financial year.

Taste Holdings, one of the smaller players in the market, plans to open about 50 Fish & Chip Co restaurants in the next six months.

MCDONALD's SA is on track to double revenue in the next four years and still plans to open about 25 restaurants a year despite tough trading conditions, MD Greg Solomon said on Monday.

Competition is intensifying in South Africa's fast-food market, particularly at the lower end, with existing companies planning to expand and foreign brands considering expansion into the country.

"It has been a tough environment since the Soccer World Cup but we should see some improvement by quarter one next year," Mr Solomon said.

Consumers had been "downtrading", he said, as they began to feel the pinch of rising costs, but McDonald's had also gained the support of new customers turning away from competitors with more expensive offerings.

The company now has 163 restaurants but hopes to speed up growth in the next year. "We do not trade in many areas. There is space to grow in parts of the North West and KwaZulu-Natal as well as the northwestern Cape," he said.

McDonald's SA was also eyeing expansion into Africa, Mr Solomon said.

"We have to learn how to eat off our own plate first," he said, and South Africa remained a priority. "We will not be the first to go into Africa, but we will be bold when we eventually do."

Businessman Cyril Ramaphosa's company Shanduka acquired the 20-year master franchise last year to run all McDonald's restaurants in South Africa. It has a combination of franchise and corporate-owned stores.

Yum, which owns KFC in South Africa, has said it will soon bring its Pizza Hut franchise to the country, while Burger King may also grace local shores in the near future, the US chain said last year.

"Threats are always there, but it also says someone else sees opportunity in this market," Mr Solomon said.

Yum is considered the world's largest fast-food restaurant company, with about 38000 restaurants in more than 110 countries. Its turnover in South Africa was about R8bn last year.

Local company Famous Brands said earlier this year that it was on the lookout for acquisitions and would consider new market segments, including "evening casual dining", within the next few months.

It plans to open about 250 new stores in the coming year, of which 48 will be outside South Africa. It reported group revenue of R2,16bn and operating profit growth of 15% to R413m for the most recent financial year.

Taste Holdings, one of the smaller players in the market, plans to open about 50 Fish & Chip Co restaurants in the next six months.

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